TMI Blog2020 (10) TMI 1050X X X X Extracts X X X X X X X X Extracts X X X X ..... [2019 (7) TMI 1449 - SUPREME COURT] . Notice u/s.148 of the Act dated 29/03/2005 was issued in the name of HLCL (non-existent entity) and accordingly, reassessment order framed thereon deserves to be quashed as void ab initio. Accordingly, additional ground raised by the assessee on 17/07/2019 that re-assessment has been framed in the name of non-existent entity is hereby allowed. - ITA No.2273/Mum/2013, ITA No.2274/Mum/2013, ITA No.2275/Mum/2013, ITA No.3550/Mum/2013, ITA No.3554/Mum/2013 And ITA No.3548/Mum/2013 - - - Dated:- 21-10-2020 - Shri M. Balaganesh, AM And Shri Pavan Kumar Gadale, JM For the Assessee : Shri Nitesh Joshi, AR For the Revenue : Shri Pratap Singh, CIT DR Shri Uodal Raj Singh, DR ORDER PER BENCH: These cross appeals in ITA Nos.2273/Mum/2013, 3554/Mum/2013, 2274/Mum/2013 3550/Mum/2013 for A.Y.2000-01 2001-02 arise out of the order by the ld. Commissioner of Income Tax (Appeals)-6, Mumbai in appeal No.CIT(A)-6/IT-3/2009-10 CIT(A)-6/IT-4/2009-10 dated 21/02/2013 respectively (ld. CIT(A) in short) against the order of assessment passed u/s.143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as Act) d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29/03/2005, the fact of amalgamation of Hind Lever Chemicals Ltd (HLCL) with Tata Chemicals Ltd (TCL) was mentioned by the ld. AO. The following chronology of dates together with its events in tabular form as submitted by the ld. Counsel of the assessee would present the facts of the entire case:- Sr. No. Date Events 1 Hind Lever Chemicals Ltd. (HLCL) having permanent account number as AAACH4115Q was subject to the jurisdiction of Assessing Officer in Chandigarh for the purposes of assessment of its income. 2 28.11.2000 HLCL filed its return of income for AY 2000-01 declaring total taxable income of ₹ 12,30,27,000 under the regular provisions of the Act and ₹ 11,16,45,000 as book profits under section 115JA of the Act. 3 01.04.2002 HLCL has been amalgamated with Tata Chemicals Ltd. (TCL) with effect from the said date. 4 14.10.2003 The High Court at Bombay approved of the aforesaid amalgamation. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the regular provisions of the Act. 4.2. It was submitted that the assessee could not file revised return in the name of amalgamated entity as the time limit for filing u/s 139(5) of the Act had expired. Per Contra, the ld. DR vehemently argued that in those days, it was only manual filing of returns. Hence the assessee could have very well filed the revised returns for the relevant assessment years under consideration. We find that the provisions of section 139(5) of the Act stipulates the circumstances under which revised return could be filed by an assessee. We find that the present facts of the assessee does not fit into any of the circumstances mentioned in section 139(5) of the Act. Hence we agree with the ld.AR s argument that assessee was prevented from filing of revised return by operation of law. In any case, we find that the fact of amalgamation has been duly informed by the assessee before the ld. AO who was framing the regular assessment for the Asst Year 2002-03. Despite that 4.3. The aforesaid tabulation would effectively summarise the arguments advanced by the ld. AR also at the time of hearing before us. From the aforesaid tabulation, it could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the assessee first of all took us through the assessment order for AY 1999-00 passed under section 143(3) of the Act dated 11.03.2002, wherein on the very heading of the assessment order it is mentioned that since merged with Tata Chemicals Limited, the relevant details are as under: - Name Address of the Assessee: M/s Sabras Investment and Trading Ltd.(since merged with M/s Tata Chemicals Ltd.) PAN/ GIR No. AABCS8618L District/ Ward/ Circle Circle-2(2) Status Company Assessment year 1999-2000 Whether Residence/ resident but not ordinarily resident/ non-resident Resident Method of Accounting Mercantile Previous Year 31.03.1999 Nature of Business Company Investment Date(s) of hearing As per order sheet Date of order 11-03-2002 Section and subsection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as an estoppel against law. This position now holds the field in view of the judgment of a co-ordinate Bench of two learned judges which dismissed the appeal of the Revenue in Spice Enfotainment on 2 November 2017. The decision in Spice Enfotainment has been followed in the case of the respondent while dismissing the Special Leave Petition for AY 2011-2012. In doing so, this Court has relied on the decision in Spice Enfotainment. 34. We find no reason to take a different view. There is a value which the court must abide by in promoting the interest of certainty in tax litigation. The view which has been taken by this Court in relation to the respondent for AY 2011-12 must, in our view be adopted in respect of the present appeal which relates to AY 2012-13. Not doing so will only result in uncertainty and displacement of settled expectations. There is a significant value which must attach to observing the requirement of consistency and certainty. Individual affairs are conducted and business decisions are made in the expectation of consistency, uniformity and certainty. To detract from those principles is neither expedient nor desirable. 19. Respectfully following t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. On 11 March 2016, a draft assessment order was passed in the name of Suzuki Powertrain India Limited (amalgamated with Maruti Suzuki India Limited). The draft assessment order sought to increase the total income of the assessee by ₹ 78.97 crores in accordance with the order of the TPO in order to ensure that the international transactions with regard to the payment of royalty to the Associated Enterprises is at Arm s Length. 11 to 14. 15. The final assessment order was passed on 31 October 2016 in the name of SPIL (amalgamated with MSIL) making an addition of ₹ 78.97 crores to the total income of the assessee. While preferring an appeal before the Tribunal, the assessee raised the objection that the assessment proceedings were continued in the name of the non-existent or merged entity SPIL and that the final assessment order which was also issued in the name of a non-existent entity, would be invalid. 16. 17. Mr Zoheb Hossain, learned Counsel appearing on behalf of the appellant submitted that: (i) The High Court was not justified in quashing the final assessment order under Section 143 (3) only on the ground that the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f two or more undertakings to a new company, or by the transfer of one or more undertakings to an existing company. Strictly amalgamation does not cover the mere acquisition by a company of the share capital of other company which remains in existence and continues its undertaking but the context in which the term is used may show that it is intended to include such an acquisition. See: Halsbury's Laws of England (4th edition volume 7 para 1539). Two companies may join to form a new company, but there may be absorption or blending of one by the other, both amount to amalgamation. When two companies are merged and are so joined, as to form a third company or one is absorbed into one or blended with another, the amalgamating company loses its entity. (iv) Fourthly, upon the amalgamating company ceasing to exist, it cannot be regarded as a person under Section 2(31) of the Act 1961 against whom assessment proceedings can be initiated or an order of assessment passed; (v) Fifthly, a notice under Section 143 (2) was issued on 26 September 2013 to the amalgamating company, SPIL, which was followed by a notice to it under Section 142(1); (vi) Sixthly, prior to the da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant would be of no effect as there is no estoppel against law. 12. Once it is found that assessment is framed in the name of non-existing entity, it does not remain a procedural irregularity of the nature which could be cured by invoking the provisions of Section 292B of the Act. Following the decision in Spice Entertainment, the Delhi High Court quashed assessment orders which were framed in the name of the amalgamating company in: (i) Dimension Apparels; (ii) Micron Steels; and (iii) Micra India. 21. In Dimension Apparels, a Division Bench of the Delhi High Court affirmed the quashing of an assessment order dated 31 December 2010. The Respondent had amalgamated with another company and thus, ceased to exist from 7 December 2009. The Court rejected the argument of the Revenue that the assessment was in substance and effect in conformity with the Act by reason of the fact that the assessing officer had used correct nomenclature in addressing the Assessee; stated the fact that the company had amalgamated and mentioned the correct address of the amalgamated company. It was the Revenue s contention that the omission on the part of the assessing offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We do not find any reason to interfere with the impugned judgment(s) passed by the High Court. In view of this, we find no merit in the appeals and special leave petitions. Accordingly, the appeals and special leave petitions are dismissed. 25. The doctrine of merger results in the settled legal position that the judgment of the Delhi High Court stands affirmed by the above decision in the Civil Appeals. 26 The order of assessment in the case of the respondent for AY 2011-12 was set aside on the same ground. This resulted in a Special Leave Petition by the Principal Commissioner of Income Tax 6 Delhi32. The Special Leave Petition was dismissed by a two judge Bench of this Court consisting of Hon ble Mr Justice Rohinton Fali Nariman and Hon ble Ms Justice Indu Malhotra on 16 July 2018 in view of the order dated 2 November 2017 governing Civil Appeal No. 285 of 2014 in Spice Enfotainment and the connected batch of cases. Though, leave was not granted by this Court, reasons have been assigned by this Court for rejecting the Special Leave Petition. The law declared would attract the applicability of Article 141 of the Constitution. For, as this Court has held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t instituted writ proceedings for challenging a notice under Sections 147/148 of the Act 1961 dated 30 March 2017 for AY 2010-2011. The reasons to believe made a reference to a tax evasion report received from the investigation unit of the income tax department. The facts were ascertained by the investigation unit. The reasons to believe referred to the assessment order for AY 2013-2014 and the findings recorded in it. Though the notice under Sections 147/148 was issued in the name of Skylight Hospitality Pvt. Ltd. (which had ceased to exist 33 Special Leave Petition (C) No. 7409 of 2018 34 Sky Light Hospitality LLP v Assistant Commissioner of Income Tax : (2018) 405 ITR 296 (Delhi) 35 LLP Act 2008 upon conversion into an LLP), there was, as the Delhi High Court held substantial and affirmative material and evidence on record to show that the issuance of the notice in the name of the dissolved company was a mistake. The tax evasion report adverted to the conversion of the private limited company into an LLP. Moreover, the reasons to believe recorded by the assessing officer adverted to the approval of the Principal Commissioner. The PAN number of the LLP was also m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar facts of the case weighed with this Court in coming to this conclusion that there was only a clerical mistake within the meaning of Section 292B. The decision in Skylight Hospitality LLP has been distinguished by the Delhi, Gujarat and Madras High Courts in: (i) Rajender Kumar Sehgal; (ii) Chandreshbhai Jayantibhai Patel; and (iii) Alamelu Veerappan. 30 . There is no conflict between the decisions of this Court in Spice Enfotainment (dated 2 November 2017)36 and in Skylight Hospitality LLP (dated 6 April 201837). 31 Mr Zoheb Hossain, learned Counsel appearing on behalf of the Revenue urged during the course of his submissions that the notice that was in issue in Skylight Hospitality Pvt. Ltd. was under Sections 147 and 148. Hence, he urged that despite the fact that the notice is of a jurisdictional nature for reopening an assessment, this Court did not find any infirmity in the decision of the Delhi High Court holding that the issuance of a notice to an erstwhile private limited company which had since been dissolved was only a mistake curable under Section 292B. A close reading of the order of this Court dated 6 April 2018, however indicates that what weigh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness or profession,- (a) the predecessor shall be assesseed in respect of the income of the previous year in which the succession took place up to the date of succession; (b) the successor shall be assesseed in respect of the income of the previous year after the date of succession. (2) Notwithstanding anything contained in sub-section (1), when the predecessor cannot be found, the assessment of the income of the previous year in which the succession took place up to the date of succession and of the previous year preceding that year shall be made on the successor in like manner and to the same extent as it would have been made on the predecessor, and all the provisions of this Act shall, so far as may be, apply accordingly. (3) When any sum payable under this section in respect of the income of such business or profession for the previous year in which the succession took place up to the date of succession or for the previous year preceding that year, assesseed on the predecessor, cannot be recovered from him, the [Assessing] Officer shall record a finding to that effect and the sum payable by the predecessor shall thereafter be payable by and recoverable from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deral Court in Chatturam v CIT39 holding that the jurisdiction to assess and the liability to pay tax are not conditional on the validity of the notice : the liability to pay tax is founded in the charging sections and not in the machinery 38 (1996) 3 SCC 525 39 (1947) 15 ITR 302 (FC)provisions to determine the amount of tax. Reliance was also placed on the decision in Maharaja of Patiala v CIT40 ( Maharaja of Patiala ). That was a case where two notices were issued after the death of the assessee in his name, requiring him to make a return of income. The notices were served upon the successor Maharaja and the assessment order was passed describing the assessee as His Highness late Maharaja of Patiala . The successor appealed against the assessment contending that since the notices were sent in the name of the Maharaja of Patiala and not to him as the legal representative of the Maharaja of Patiala, the assessments were illegal. The Bombay High Court held that the successor Maharaja was a legal representative of the deceased and while it would have been better to so describe him in the notice, the notice was not bad merely because it omitted to state that it was served in that cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view be adopted in respect of the present appeal which relates to AY 2012-13. Not doing so will only result in uncertainty and displacement of settled expectations. There is a significant value which must attach to observing the requirement of consistency and certainty. Individual affairs are conducted and business decisions are made in the expectation of consistency, uniformity and certainty. To detract from those principles is neither expedient nor desirable. 35. For the above reasons, we find no merit in the appeal. The appeal is accordingly dismissed. There shall be no order as to costs. 4.5. We find in the aforesaid case before the Hon ble Supreme Court also, the Hon ble Supreme Court was concerned with similar fact scenario where the draft assessment order as well as the physical assessment order had been passed on the amalgamating company followed by reference to amalgamated company in the title. In that case also, the revenue s Counsel before the Hon ble Supreme Court urged that since the assessment order has been passed referring to both the names, the said order could not be recorded as invalid. Similar arguments were advanced by the ld. DR before us also. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , additional ground raised by the assessee on 17/07/2019 that re-assessment has been framed in the name of non-existent entity is hereby allowed. 5. Since, the entire re-assessment is quashed on the aforesaid ground, the adjudication of other additional grounds raised by the assessee and adjudication of original grounds raised by the assessee would become infructuous and we refrain to give our opinion on the same and all those issues are hereby left open. 6. The decision rendered herein for A.Y.2000-01 would apply with equal force for A.Y.2001-02. As far as assessment framed for A.Y.2002-03 is concerned, we find that this is a regular assessment framed by the ld. AO u/s.143(3) of the Act in the name of amalgamating company (non-existent company) in a similar fashion despite the fact that the fact of amalgamation was duly brought to the notice of the ld. AO during the course of assessment proceedings itself as could be evident from the aforesaid chronology of dates and events and various factual documents available in the factual paper book before us. Hence this regular assessment framed u/s 143(3) of the Act for the A.Y. 2002-03 also stands on the similar footing with A.Y. 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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